Page 5 - 31. COMPILER QB - CSR

However, if a company has already undertaken certain CSR activity for which a liability has been incurred by
entering into a contractual obligation, then in accordance with the generally accepted principles of accounting,
a provision for the amount representing the extent to which the CSR activity was completed during the year,

needs to be recognised in the financial statements.

(ii) Treatment of excess amount spent on CSR Activities
Since 2% of average net profits of immediately preceding three years is the minimum amount which is
required to be spent under section 135 (5) of the Act, the excess CSR spending can be set off against the

required 2% CSR expenditure up to the immediately succeeding 3 financial years subject to compliance with
the conditions mentioned under Rule 7(3) of Companies (CSR Policy) Rules, 2014. However, the excess
amount spent on CSR activities can be set off from 22 January 2021. No carry forward in financial years
before FY 2020-21.

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